Credit Management in Ancaster, Ontario
I have over 19 years of experience working with all types of financial institutions, investing in property and helping secure new properties for families. I guarantee you will be surprised with my creative and professional approach to managing credit.
What is Credit Reporting? Many people don’t realize how important it is to maintain a good credit rating. Nor do they understand what is involved in achieving this. The first step is to review your own individual credit report, which is a detailed history of how consistently you meet your financial obligations. In Canada there are two major credit bureaus – Equifax and Trans Union Each of these companies can provide you with a copy of your individual credit report, for a nominal fee. It is more useful to order a credit report with your credit score (beacon score).
Once you have a copy of your credit report you should check for the following:
- wrong mailing addresses
- incorrect social insurance number
- signs of identity theft
- errors in your credit accounts
- late payments
- unauthorized hard enquiries
Hard inquiries, done when you apply for new credit, can affect your credit score while soft inquiries by your existing creditors when requesting an update of your information do not affect your score.
What is a Beacon Score?
Your credit score – or beacon score – translates information from your credit report and other sources into a number between 300 and 900, representing a prediction of your overall credit-worthiness. The higher your score the more likely you are to be approved for a mortgage and receive favorable rates.
How long do items appear on my credit report?
Inquiries remain on your report for three years after the date of inquiry. Your credit information remains for six years from the activity date. Consumer proposals will remain on your report for three years while the first bankruptcy reports stay for seven years. Should you be unfortunate enough to declare bankruptcy twice or more, the second and subsequent times will remain on your report for 14 years each. You can see how credit abuse can impede your ability to obtain credit in the future.
Why is this important?
Your credit score is a number that helps lenders determine the risk of lending you money. In general, the higher your credit score, the better your paying habits are perceived by lenders. It is a three-digit number that summarizes your creditworthiness. It's a number that lenders use to decide whether to approve your loan application and at what interest rate.
Credit score is a number that reflects the creditworthiness of an individual. It is calculated based on several factors, such as your payment history, the length of time you’ve been using credit, the types of credit accounts you have and whether you have any unpaid debts. A higher credit score can save you money on loans and other financial products, as well as make it more likely that you'll be approved for certain types of loans. Credit scores are calculated based on how you handle your current debt, such as paying bills on time or being delinquent in payments.
To maintain a high credit score and manage your finances well, here are some tips:
Pay your debts on time.
Paying your debts on time is the most important thing you can do to manage your credit score. It's also important to pay all of your bills in full and on time, as this reduces the amount of debt that you have and shows lenders that you're responsible with their money.
Payment history counts for about 35 percent of your credit rating, so making multiple payments over several months will help build a solid payment history.
Keep credit card balances low.
Credit cards can be a great tool to help you manage your money. They can also be a huge liability if used improperly. If you use credit cards as a means of borrowing money, they can be useful because they offer features such as rewards programs and low interest rates. However, if you do not pay off the balance in full each month or carry an outstanding balance on the card for too long, it can cost you thousands of dollars in interest payments alone!
To avoid paying high interest rates and fees on your credit card purchases:
- Pay off your balance every month. If possible, try to pay off the entire balance at once before the due date so that no interest is charged for that period.
- Keep track of what's owed on each card so there aren't any surprises when checking statements online or receiving paper bills in snail mail every month (some people prefer this method because it reminds them to stay organized).
Having a higher credit limit and not using is near to its limit would give you a nicer image to the lenders and a higher chance for you to get a very good offer.
Don't open many new accounts at once.
If you're shopping for a mortgage, don't open too many new accounts at once. While this may be a good time to apply for a credit card or car loan, it's not the right time to do so if lenders are counting on your history of responsible repayment. Opening too many new accounts in a short period of time can lower your total score—and that could mean losing out on those needed points when comparing with other applicants. You may limit up to 2 credit cards.
Don't close unused credit cards.
If you have credit cards with a low balance and high credit limit, don’t close them. The same goes for any card that has a low interest rate or low annual fee.
Credit cards are the most important way to build your score -- especially if you’re just starting out. Your goal should be to use your cards responsibly and pay off your balance each month. The more serious you are about improving your credit, the less likely it is that closing an account will help improve things in the short term.
Avoid making multiple applications for credit in a short period of time.
The first thing to note is that it's important to avoid making multiple applications for credit in a short period of time. This is an industry practice known as "piggybacking," and it will ding your credit score.
An application for a new card can stay on your record for up to two years, so it's best not to apply for too many cards in a given period. It's also best not to apply if you don't need the card or plan on using it often (i.e., opening up new accounts without having the money available).
Identity fraud/theft is on the rise in Canada - protect yourself! Review your credit report regularly.
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